Shares of drugstore chain Rite Aid
Today, the firm released sales figures and a revised outlook that reported an anemic 1% rise in same-store sales for August. Overall, the revenues inched up a slim 0.7% to $1.56 billion.
Management blamed the late-summer slip on the timing of Labor Day weekend, tight-fisted health-care administrators, and competition from mail-order outfits. At least they didn't point the finger at the weather, Wal-Mart
But before you buy into those explanations, it's revealing to note that these woes aren't being visited upon everyone in the industry. August sales numbers at No. 1 Walgreen
For the full year, the company now expects around $17 billion with net income between $0.16 and $0.22 per share. That's lower than the Street was expecting, and it raises questions about the success of the firm's efforts to nurture revenue and earnings growth through slimmer, trimmer operations.
Though that sum will likely more than double last year's $0.09 per share, today's $3.89 stock price values the company at 20 times the earnings projection. That may prove to be a bargain if this is indeed a temporary slowdown and management can deliver more robust growth. But until Rite Aid can deliver comps performance at least on par with its peers, the stock may leave investors with little more than a stomachache.
For more drugstore Foolishness:
- Are you ready for Rite Aid?
- Wishing for Walgreen's sunny sales results?
- Relive the good times.
Seth Jayson is a fan of the corner drugstore, but at the time of publication, he had no position in any company mentioned. View his Fool profile here.
